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Peter Tutton, head of policy at debt charity StepChange, says: 'Borrowing is starting to return to the levels seen before the last financial crash, and alarm bells should be ringing.

'The worry is that the growth in second charge mortgages could put borrowers' homes at risk if they see a drop in income, or there's a downturn in the economy. We have seen this happen in the past.'

Around 20,000 people have taken out second charge mortgages in the past year, industry figures show. Typically, the money is used to pay off other debts or for home repairs.

One lender, Equifinance, says in 2013 it was 'extremely rare' for professionals to apply for these deals, but now it's seeing more people in 'good employment' taking out larger loans.

Lenders have the right to repossess your home if you don't keep up with payments. This means firms are more willing to lend to people who are already in debt or have a poor credit history.

But because these customers are deemed to be more risky, lenders will typically charge a higher rate.

Equifinance loans cost up to 37.7 per cent through brokers, which means a £9,999 loan could cost as much as £38,639 if paid back over ten years.

It would mean paying £322 a month in interest and repayments on top of your existing mortgage bill.

A spokesman for Equifinance says it is 'transparent' about its rates, adding that its customers come through regulated financial advisers who consider 'all loan options available'.

Brokers often impose extra charges. Manchester-based Evolution Money has an arrangement fee of 10 per cent of the loan amount and a so-called servicing fee at 8 pc of the loan. The total cost of one of its deals reached 53 per cent.

Evolution Money says its credit repair homeowner loans are competitive as an alternative to higher cost unsecured loans and that the average rate for a £15,000 loan is 31 per cent.

Mr Tutton, from Stepchange, says a redundancy or interest rate hike could signal disaster for many borrowers.

'Be cautious about taking out second charge loans to pay off other debts,' he says. 'If you have an irregular income, there is a greater risk of losing your home than with unsecured loans.'

Eric Hawkins, 70, a renewable energy consultant from Dorset, took out a second charge loan for £40,000 in 2006.

Eric Hawkins (pictured with wife Jane) a renewable energy consultant from Dorset, took out a second charge loan for £40,000 in 2006

The loan, from Kensington, was an 11 per cent interest-only deal, so Eric and his wife, Jane, 72, were paying £367 a month without reducing the debt.

He invested the cash in his solar energy business — and hoped to pay it back in a lump sum after ten years.

But his plans were scuppered when the business went bust during the financial crisis.

Although the couple say they have paid Kensington £42,000 in interest and late payment charges over the years, the debt still stands at £42,117.

When their main mortgage from Birmingham Midshires ended last year, the lender agreed to extend it for 25 years.

But Kensington refused them an extension and threatened court action and repossession if they didn't pay up.

It has now agreed to give them five years to clear the debt, but is still charging 8 per cent interest, or £284 a month.

'When I took out the loan, business was booming and it didn't seem like a big risk,' Eric says. 'I thought by now we would be able to retire comfortably with no debts, but we'll have to borrow from family to stay in our home.'

A spokesman for Kensington says: 'We always seek to work closely with our customers to try to find solutions to avoid the need to take formal action. Repossession is always the last resort.'

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